What Do I Do With This $$?
I have been reading and learning about investing in Real Estate and now have closed on my first deal and walked away at closing with $20k. Does anyone have any opinions on how I can make this money work the best for my investing? I just don't want to make any bad decisions with what I do with it. I've heard about getting a line of credit but I'm not too sure what that entails.... thanks!~
Couple of things come to mind:
- Preserve your capital. Continue to do deals with as little of that $20K as you can.
- You did one successful deal, replicate your methods. There are infinite numbers of ways to make $$ in this game, but if you find a proven strategy that's right for you, do it again! (I made a ton in commercial, I'm now branching into residential. BUT I'm taking my time and learning a great deal on these forums.) I'm still active in commercial RE, an area I understand, and the cash continues to flow while I learn residential.
Not sure why you need a line of credit. I guess it never hurts to have one, but why? You pay interest and it has no real advantage over cash. Unless you're talking about a HELOC, a line of credit is another way for banks to chip away at your cash.
Good luck-
WG
writergig,
A credit line (credit cards, working line of credit, or home equity line of credit) gives you a funding source for quick cash. You don't have to wait for loan approval.
A credit line lets me negotiate from a stronger position when I can bring all cash to the settlement table quickly. I have a working credit line with my bank which allows me to close almost as soon as the appraisal is completed and the attorney can get the title work done -- normally two weeks maximum.
There is no interest charged against my credit line until I actually use it, and then only for the amount I use. When used, I am charged interest only at prime plus one.
I'm acutely aware of what a credit line is, how they work, etc. I've used them myself in the past and have offers every day from banks, given my strong holding in commercial RE.
I was responding to her Raquel's open question, posted above.
Sure, they can be great, when needed. But they aren't necessary to do deals, if you hae $20K in the bank.
And yes, when you do use them, you're charged interest. You can avoid the interest charge by dealing with cash.
Rquel was asking opinions as to whether or not she needs one and my answer was and still is 'no'.
It certainly won't hurt her, unless she gets over-leveraged and the interest rates eat her up.
Credit lines are fine for some people, I prefer to do business other ways.
WG
reinvest in rei.....km
Quote:
On 2004-12-24 23:19, raquel1094 wrote:
I have been reading and learning about investing in Real Estate and now have closed on my first deal and walked away at closing with $20k.
Raquel - would you mind sharing some of the details of your deal for other newbies to learn and get inspiration from?
How did you manage to walk away from the closing table with 20k? Please share!!!